An Australian software company takes US venture funding, incorporates a Delaware parent, and suddenly has investors asking for US GAAP financials while its Australian entity still has AASB obligations. This is a common and genuinely confusing position.
Here is how the frameworks relate.
Australian Accounting Standards — AASB — are Australia's adoption of International Financial Reporting Standards. AASB 15 is IFRS 15. AASB 121 is IAS 21. AASB 16 is IFRS 16.
For most practical purposes, if you comply with AASB you comply with IFRS. There are some Australian-specific additions, and for-profit entities complying with Australian standards can generally state compliance with IFRS.
Australia also operates a tiered disclosure regime: Tier 1 with full disclosures, and Tier 2 with simplified disclosures for entities without public accountability. Most private companies report under the simplified tier, which reduces disclosure volume rather than changing recognition or measurement. Your auditor will confirm which applies.
Not a dialect — a separate system, maintained by the FASB. For a growing software company the differences that most often matter:
Revenue. ASC 606 and AASB 15 were developed jointly and are substantially converged. This is the good news: your revenue accounting is unlikely to differ materially between the two.
Leases. Under AASB 16 essentially all leases come onto the balance sheet with a single model. US GAAP retains a dual classification between finance and operating leases, with different expense profiles. Same lease, different P&L shape.
Development costs. Under IFRS and AASB, development costs meeting specific criteria must be capitalised. US GAAP is generally more restrictive for software developed for sale, with different rules for internal-use software. This can produce a materially different profit figure for an R&D-heavy company.
Impairment. Different models, and reversal of impairment is permitted under IFRS in certain circumstances but generally prohibited under US GAAP.
You will often need both. The Australian entity has statutory obligations under AASB. The US parent reports to investors under US GAAP, and a future US listing or trade sale will assume it.
That does not mean two sets of books. It means one ledger with enough dimensional depth that both views can be produced from the same underlying transactions, with a documented reconciliation of the differences.
The pattern that works: maintain the primary ledger under one framework, capture the adjusting differences as identifiable entries, and produce the second framework as a reported view rather than a parallel accounting process.
The pattern that fails: maintaining two spreadsheets that drift, until nobody can explain why the two profit figures differ by an amount that changes every quarter.
The most expensive version of this problem is discovering it late. A company that has reported under one framework for three years, then needs comparatives under another for a transaction, is looking at a restatement exercise under time pressure.
If US investors are on your register or on your roadmap, have the conversation with your auditor now about which framework is primary, what differences will arise, and how they will be tracked. It is a cheap conversation today and an expensive one during diligence.
We configure ledgers for ANZ-headquartered groups that need to satisfy both Australian statutory requirements and US investor reporting — which mostly means getting the dimensional structure right at the start.
Nothing here is accounting advice for your specific circumstances; your auditor owns that. We are happy to talk about the systems implications. See also when one entity becomes a group.